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PETITIONER: STERLING GENERAL INSURANCE CO.  LTD.

       Vs.

RESPONDENT: PLANTERS AIRWAYS PVT.  LTD.

DATE OF JUDGMENT19/12/1974

BENCH: MATHEW, KUTTYIL KURIEN BENCH: MATHEW, KUTTYIL KURIEN BHAGWATI, P.N. UNTWALIA, N.L.

CITATION:  1975 AIR  415            1975 SCR  (3) 136  1975 SCC  (1) 603

ACT: Arbitration  Act,  1940,  Section  37(4)-"Undue   hardship", meaning  of-Extension of time for referring the  dispute  to arbitration-"Undue  hardship", if could be given  a  liberal interpretation.

HEADNOTE: The  respondent , a common carrier of goods, had  taken  out three  transit  policies of insurance renewable  every  year from the appellant.  The freight policy taken out in January 1969,  was  against risk of loss or damage to any  goods  or merchandise  during transit.  In June 1971.  the  respondent declared to the appellant that it had received for transit a consignment  of 185 packages of general merchandise  alleged to  be  of  the total value  of  Rs.  1,10,000/(approx)  for transportation from Calcutta to various places in Assam  and Tripura and paid the requisite premium on the value of goods and   the  goods  stood  insured  under  the  said   policy. According  to the respondent on the evening of 29-6-71,  the consignment  of  185 packages was loaded in Truck  No.  WGH- 8261,  and  the  truck left Calcutta on  the  same  day  for Gauhati.  It is alleged that the owner of the truck  reached Barasat on the night of 29th June, 1971, there was a robbery and  neither the truck, nor the driver, nor the  merchandise could  be traced.  On 1-7-1971, the respondent sent  letters to  the  officer incharge of Jorabagan Police  Station,  the Assistant Commissioner of Police, Intelligence Branch,  Lall Bazar.   Calcutta  and  the Deputy  Commissioner  of  Police Intelligence  Branch  intimating them that  the  truck,  the driver,  the  assistant  and the merchandise  could  not  be traced.   A  copy  of  the  letter  sent  to  the  Assistant Commissioner  of Police.  Lall Bazar, Calcutta was  sent  to the  appellant and it was received by the appellant on  2-7- 1971.  On 1-7-1971 and 21-9-1971, the respondent lodged  the claim for loss with the appellant on the basis that the loss was covered by the policy.  On 3-7-1971, the appellant  sent a,  letter to the respondent calling upon the respondent  to furnish  the particulars as regards the name and address  of the  owner  of  the vehicle, the name and’  address  of  the driver  and other particulars.  On 21-9-1971 the  respondent informed the appellant by a letter that the information  and

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the  records  asked for in the letter  dated  3-7-1971  were already  supplied  to  Mr. A. L. Chopra, the  agent  of  the appellant on 5-7-1971 when he called upon the respondent for that,  purpose.  On 10-10-1971. the appellant wrote  to  the respondent   informing   that  until  the  report   of   the investigation by the police was produced by the  respondent, it  would  not  be possible for  the  appellant  to  proceed further in the matter.  The appellant received a copy of the investigation report by the police at Barasat on  12-5-1972. The  report was to the effect that the alleged  episode,  of robbery was false.  On this basis, the appellant sent to the respondent  a letter dated 4-8-1972 stating the contents  of the investigation report of the police at Barasat asking for the  investigation  report  of Jambagan  Police  Lall  Bazar Police.   Thereafter the appellant intimated the  respondent by  letter dated 16-2-1973 disclaiming its  liability  under the freight policy as regards the loss of the consignment of 185  packages.   On receipt of the  letter,  the  respondent wrote  to the appellant on 30-3-73 asking for the ground  on which the appellant disclaimed its liability.  The appellant sent a letter after two months on May 30, 1973, stating that it had nothing to add to what had been stated in its  letter dated  February 16, 1973.  Thereafter, the  respondent  took the  advice  of solicitors and counsel.  On  17-8-1973,  the respondent filed the application before the High Court under s. 37(4) of the Act for extension of time for referring  the dispute  to arbitration till a date 15 days after the  order of the High Court.  In the application the respondent stated the reasons for the delay in filing the application in court after receiving the letter dated May 30, 1973.  In answer to the  application, the appellant contended that s.  37(4)  of the   Act  had  no  application  that  the  Court   had   no jurisdiction  to extend the time and that even if the  court had 137 jurisdiction,  there  were no valid grounds  for  extension. The  learned  Judge  of  the High  Court  passed  the  order extending  the  time  to refer the  dispute  to  arbitration within a fortnight from 14-1-1974. In  this  appeal  by special leave,  it  was  contended  for appellant  that  there  would be no undue  hardship  to  the respondent   if  the  time  for  preferring  the  claim   to arbitration  is not extended and, therefore, the High  Court went  wrong  in exercising its discretion by  extending  the time. Rejecting the contention and dismissing the appeal, HELD  ; (i) Court has to take a liberal view of the  meaning of the words "undue hardship" occurring in section 37(4)  of the  Arbitration  Act, 1940.  ’Undue’  must  mean  something which  is not merited by the conduct of the claimant, or  is very much disproportionate to it. [143E-F] Steamship  Co.  of 1912, etc. v.  Anglo-American  Grain  Co. [1958]  2 Llyod’s Rep. 341; Watney, Comba, Raid & Co. v.  E. M.  Dower & Co. etc. [1956] 2 Lloyd’s Rep. 129, 13 1; F.  E. Hookway  &  Co. Ltd. v. H. W. H. Hopper & Co. [1950]  2  All E.R.  842; Stanhope Steamship Co. Ltd. v. British  Phosphate Commissioners  [1956]  2  Lloyd’s Rep.  325;  and  Librarian Shipping  etc.  v.  A King & Sorts [1967] 1  All  E.R.  934. referred to (ii) The  respondent was having dealings with the  appellant in  the  business of insurance from 1958 onwards and  in  no instance  was the claim made by the respondent  rejected  by the  appellant.  The conduct of the respondent in  enquiring of the appellant the grounds on which the claim was rejected was  quite  reasonable.  It was only after  the  grounds  of

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rejection were known that the respondent could have  decided whether to resort to arbitration or not.  If the grounds  of rejection  would  come  within the clause  of  exclusion  of liability  under  the Policy, it would serve no  purpose  to incur  the  expense and hardship involved  in  resorting  to arbitration.   The  appellant did not give  the  reason  for disclaiming  liability even in its letter  dated  30-5-1973. We do not think that there was any lack of promptness on the part  of  the  respondent in waiting for the  reply  to  its letter  dated 30-3-1973.  In the facts and circumstances  of the  case  it  is clear that the High  Court  exercised  its discretion  properly in extending the time.  The conduct  of the  respondent was reasonable.  It took all steps it  could when it knew about the alleged robbery to inform the  police and  the  appellant.   The  fact  that  the  Barasat  police reported  that the case was false does not necessarily  mean that  the  respondent  tried to practise any  fraud  on  the appellant. The respondent had filed a suit against the owner of  the truck in question in July 1972 for the  recovery  of the amount of loss.  It also paid the claims arising out  of the loss of goods which were transported through the  truck. All  these go to show the bona fides and  reasonableness  of the conduct of the respondent.  Both the amount at stake and the  reasons  for  delay are  material  in  considering  the question  of  undue hardship.  It cannot be  said  that  any material  prejudice  would  be caused to  the  appellant  by extending  the time.  There would be undue hardship if  time is  not extended, as the consequence of non-extension  would in any event be excessive and out of proportion to the fault of  the  respondent, if any, in not being prompt.   It  also cannot  be,  said that the mere fact that a claim  would  be barred would be undue hardship. [144B-C; 14; 145A-B]

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 535 of 1974. Appeal  by special leave from the Judgment and  order  dated the  14th January, 1974 of the Calcutta High Court in  Award Case No. 181/1973. S.   T.  Desai, B. P. Maheshwari, Sharad Manohar and  Suresh Sethi, for the appellant. Somnath Chatterjee, and P. K. Mukherjee, for the respondent. The Judgment of the Court was delivered by 138 MATHEW,  J.-This  appeal.  by  special  leave,  is  directed against  an order of a learned judge of the’  Calcutta  High Court  allowing an application filed under s. 37(4)  of  the Arbitration  Act,  1940  (hereinafter called  the  Act)  for extension of time to refer the matter of arbitration. The  facts  are  these.  The appellant is  a  company  doing business  in general insurance.  The respondent  carries  on business  as a common carrier of goods.  The respondent  had taken  out  three transit policies  of  insurance  renewable every year.  The policy which is relevant for the purpose of the present appeal is freight policy No. CL1/RE-P/257  taken by  the  respondent  in January,  1969  from  the  appellant against  risk of loss or damage to any goods or  merchandise during transit. In June 1971, the respondent declared to the appellant  that it had received for transit a consignment of 185 packages of general merchandise alleged to be of the total value of  Rs. 1,10,000  (approx)  for  transportation   from  Calcutta  to various  places in Assam and Tripura and paid the  requisite premium  on the value of goods and the goods  stood  insured

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under the said policy.  According to the respondent, on  the evening  of  29-6-71, the consignment of  185  packages  was loaded in Truck No. WGH-8261, and the truck left Calcutta on the  same day for Gauhati.  It is alleged that the owner  of the  truck  informed  the respondent that  after  the  truck reached Barasat on the night of 29th June, 1971, there was a robbery  and  neither  the truck, nor the  driver,  nor  the merchandise  could  be traced. On 1-7-1971,  the  respondent sent  letters  to the officer-incharge of  Jarabagan  Police Station, the Assistant Commissioner of Police,  Intelligence Branch, Lall Bazar  Calcutta and the Deputy Commissioner  of Police, Intelligence Branch   intimating them that the truck which  left  Calcutta  on 29th June  1971  had  not  reached Beniagram  at  the scheduled time and that  the  truck,  the driver,  the  assistant  and the merchandise  could  not  be traced.  A  copy  of  the  letter   sent  to  the  Assistant Commissioner of Police, Lall Bazar, Calcutta was sent to the appellant and it was received by the appellant on  2-7-1971. On  1-7-1971 and 21-9-1971, the respondent lodged the  claim for  loss with the appellant on the basis that the loss  was covered  by  the policy. On 3-7-1971, the appellant  sent  a letter  to their respondent calling upon the  respondent  to furnish  the particulars as regards the name and address  of the owner of the vehicle, the name and address of the driver and other particulars. On 21-9-1971, the respondent informed the  appellant  by  a letter that the  information  and  the records asked for in the letter dated 3-7-1971 were  already supplied to Mr. A. L. Chopra, the agent of the appellant  on 5-7-1971,  when  he  called upon  the  respondent  for  that purpose.   On  10-10-1971,  the  appellant  wrote   to   the respondent   informing   that  until  the  report   of   the investigation by the police was produced by the  respondent, it  would  not  be possible for  the  appellant  to  proceed further in the matter. The appellant received a copy of  the investigation report by the police at Barasat on  12-5-1972. The  report  was to the effect that the alleged  episode  of robbery was false. On this basis, the appellant sent to  the respondent  a letter dated 4-8-1972 stating the contents  of the investigation report of the police at Barasat asking for the investigation report of Jarabagan  139 Police  Lall  Bazar  Police-.   Thereafter  the,   appellant intimated   the   respondent  by  letter   dated   16-2-1973 disclaiming  its  liability  under  the  freight  policy  as regards  the  loss of the consignment of 185  packages.   On receipt of the letter, the respondent wrote to the appellant on  30-3-1973 asking for the grounds on which the  appellant disclaimed its liability.  The appellant sent a letter after two  months on May 30, 1973, stating that it had nothing  to add to what had been stated in its letter dated February 16, 1973.   Thereafter,  the  respondent  took  the  advice   of solicitors and counsel.  On 17-8-1973, the respondent  filed the application before the High Court under s. 37(4) of  the Act  for  extension  of time for referring  the  dispute  to arbitration till a date 15 days after the order of the  High Court.   In  the  application,  the  respondent  stated  the reasons  for  the delay in filing the application  in  court after receiving the letter dated May 30, 1973.  In answer to the  application, the appellant contended that s.  37(4)  of the  Act  had  no,  application,  that  the  court  had   no jurisdiction  to extend the time and that even if the  court had jurisdiction, there were no valid grounds for extension. The  application came up for hearing before a learned  Judge and  lie passed the order extending the time to,  refer  the dispute to arbitration within a fortnight from 14-1-1974.

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The,  question that arises for consideration is whether  the High Court had power to extend the time and if it had power, whether  it  exercised its power properly in  extending  the time  for  preferring the claim to arbitration.   That  will depend upon a correct interpretation of the relevant clauses of the policy and of s. 37(4) of the Act. Clause  I of the policy states that notice of any  accident, loss or damage affecting the insurance shall be given to the Company at the earliest possible date and not later than  30 days from the date of the accident, loss or damage.   Clause 2  of the policy provides that in the event of any  loss  or damage  covered by the insurance shall produce and  give  to the  Company all evidence as may be reasonably  required  by the  Company.  Clause 9 provides that if the  insured  shall make any claim knowing the same to be false or fraudulent as regards  the amount or otherwise the insurance shall  become void  and all claims thereunder shall be forfeited.   Clause 11  states that all differences arising out of the  contract shall  be referred to the decision. of an arbitrator  to  be appointed in writing by the parties or if they cannot  agree upon   a   single  arbitrator,  to  the  decision   of   two arbitrators,  one to be appointed in writing by each of  the parties within one calendar month after having been required in  writing so to do by either of the parties.   It  further provides  that the making of an award by the  arbitrator  or arbitrators  shall be a condition precedent to any right  of action  against  the  Company.   Clause  12  which  is   the material’. clause for the purpose of this case reads :               "If  the Company shall disclaim  liability  to               the  Insured for any claim hereunder and  such               claim  shall not within three calendar  months               from the date of such disclaimer have been                140               preferred to Arbitration under the  provisions               herein  contained,  then the claim  shall  for ill p urposes be deemed to have been abandoned               and   shall  not  thereafter  be   recoverable               hereunder."               Section 37(4) of the Act reads as follows               "Whether  the terms of an agreement  to  refer               future differences to arbitration provide that               any  claims  to which  the  agreement  applies               shall  be barred unless notice to  appoint  an               arbitrator  is  given  or  an  arbitrator   is               appointed  or  sonic other  step  to  commence               arbitration proceedings is taken within a time               fixed by the agreement and a difference arises               to which the agreement applies, the Court,  if               it is of opinion that in the circumstances  of               the  case undue hardships would  otherwise  be               caused,  and notwithstanding that the time  so               fixed has expired, may on such terms, if  any,               as the justice of the case may require, extend               the time for such period as it thinks proper."               _ It was not seriously contended that s. 37(4) of the Act  was not applicable to the agreement embodied in the policy  in question  and the High Court had no jurisdiction  to  extend the  time.   The only contention pressed on  behalf  of  the appellant  was that in the circumstances of the case,  there would be no undue hardship to the respondent if the time for preferring  the  claim to arbitration is not  extended  and, therefore,  the  High Court went- wrong  in  exercising  the discretion by extending the time. There  are no decisions of this Court or of the High  Courts

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concerning  the  relevant  consideration to  be  taken  into account  in exercising the jurisdiction for  extending  time under  S.  37(4) of the Act. Section 16(6) of  the  English Arbitration Act, 1934 which is practically the same as s. 27 of  the English Arbitration Act of 1950 is in  pari  materia with  s.  37(4) of the Act.  Therefore,  the  interpretation placed  by  English Courts upon s. 16(6). and s. 27  of  the respective ,Acts has great persuasive value. The English courts originally took a very strict and  narrow view  ,of the words "undue hardship".  In Steamship  Co.  of 1912  etc. v. Indlo-American Grain Co. etc.(1) Lord  Parkar, C.J. said :               "It has been said, over and over again by this               Court,   that  there  must  be  very   special               circumstances  for  extending  the  time.   Of               course,  if a valid claim is barred, there  is               hardship, but that is not what is provided for               by  the  clause,  and before  this  Court  can               extend  the time they must be  satisfied  that               the hardship amounts in the particular case to               undue hardship........... In Watney, Comba, Raid & Co. v. E. Al.  Dower & Co. Ltd.(2) Goddard, C.J. said :               "I  desire  to say in  the  clearest  possible               terms that the mere fact that the claimant  is               barred cannot be held to be an 1. (1958) 2 Lloyd’s Rep. 341. 2. (1956) 2 Lloyd’s Rep. 129, 131.  141               undue  hadship,  which  is  what  the  section               requires  to be found by the court  before  it               extends  the time.  The section does not  mean               that  this Court can take out of the  contract               the  provision which will bar the claim if  it               is not pursued in time.  They have no power to               do that.  The only thing they have power to do               is  to  extend the time if undue  hardship  is               caused.   One, can visualise certain cases  of               undue hardship.". In  F.  E. Hookway & Co. Ltd. v. H. W. H.  Hopper  &  Co.(1) where  the buyers made an application for extension of  time under  S.  16(6) of the English Act of 1934,  Denning,  L.J. observed   That   the  extent  of  delay   in   a   relevant circumstances to be considered, that if the delay is not  on account of the fault of the buyer, it would no doubt, be  an undue hardship on him to hold the clause against him but, if the delay is his own fault, the hardship may not be undue as it  may  be a hardship which it is due and  proper  that  he should   bear.   He  further  said  that  another   relevant circumstance  was whether there was evidence of any loss  on any sub-contracts and claims by sub-buyers or any complaints by  them and if there was evidence of such loss  or  claims, then  the court would take a lenient view of the  delay  and bold  that, notwithstanding it, there was undue hardship  on the buyer.               In  Stanhope  Steamship Co.  Ltd.  v.  British               Phosphate Commissioners(2), Singleton.  J., in               delivering the judgment said               "What,   then,  is  the  meaning   of   "undue               hardship"  ?  "Undue",  it  is  said  by   Mr.               McCrindle,   means  something  which  is   not               merited by the conduct of the claimant.   That               may  be  right.  If the result  of  claimant’s               being perhaps a day late is so oppressive,  so               burdensome,   as  to  be  altogether  out   of

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             proportion  to  the fault, I  am  inclined  to               think  that  one may well say  that  there  is               undue hardship.  Both the amount at stake  and               the   reasons  for  the  delay  are   material               considerations-" In  Librarian Shipping etc. v. A King & Sons(3),  the  facts were  these.  A vessel was let on a voyage charter party  in Centrocon from containing an arbitration clause under  which any  claim  had  to be made in writing  and  the  claimant’s arbitrator had to be appointed within three months of  final discharge.   A  fire  occurred on board  the  vessel  during leading.   Both  the owners and the  charterers  had  claims against  each other.  The time limit was to expire  on  June 26,   1966.   The  parties  were  negotiating   and.   after considerable correspondence. a meeting between both  parties was  arranged for June 27, 1966, with a view to  settlement. The meeting did not result in a settlement.  The  charterers first realised that time had expired which the owners sought an  extension of it by consent, nine days after the  expiry. The charterers had not contributed to the delay on the  part of  the owners in relation to the arbitration  clause.   The charterers did not consent to the time being extended.   The owner-, applied under s. 27 of the Arbitration Act. 1950 for an  extension  of time on the ground that  "undue  hardship" would otherwise be caused to them.  Their claim 1. [1950] 2 All E.R. 842. 2. (1956) 2 Lloyd’s Rep. 325. 3. [1967] 1 All E.R. 934 142 amounted  to  about  pound 33.000.  The  master  granted  an extension of time, but on appeal the judge refused it.   On further appeal the court by a majority said that if the time were  not  extended, undue hardship would be caused  to  the owners since they would be deprived of what might be a valid claim for pound 33,000 by a delay of only a few days due  to excusable inadvertence, that the charterers would not in any way  be prejudiced by time being extended and so  the  court would  exercise  the discretion conferred by s.  27  of  the Arbitration  Act, 1950, and ’Would extend the time.  In  the course of his judgment Lord Denning, M. R. observed that  in the past the courts had been inclined to emphasize the  word "undue" and to say that if a man does not read the  contract and is a day or two late, it is a "hardship": but it is  not an  "undue hardship", because, it is his own fault but  that the  interpretation  was narrow.  He said that  these  time- limit  clauses  used to operate most unjustly  on  claimants for, they found their claim barred by some oversight and  it was  to. avoid that injustice the legislature intervened  so as to enable the courts to extend the time whenever "in ,the circumstances of the case undue hardship would otherwise  be caused".  He also said that the word "undue" in the  context simply   means   excessive   hardship   greater   than   the circumstances  warrant and that even if a claimant has  been at fault himself, it is an undue on him if the  consequences are-put of proportion to his fault.  He further stated  that even  if a claimant makes a mistake which is excusable,  and is  in consequence a few days out of time, then if there  is no  prejudice to the other side, it would be altogether  too harsh  to deprive him of ,all chance for ever of coming  and making  his  claim  and that is all the  more  so,,  if  the mistake  is contributed or shared by the other side.  He  ,- then observed               "It  was said that this was a matter  for  the                             Judge’s  discretion.   True enough. We  have,               however,  said  time and again  that  we  will

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             interfere   with  a  Judge’s   discretion   if               satisfied  that  the  discretion  was  wrongly               exercised.   In  any case the judge  was,  not               exercising an unfettered discretion.  He  felt               himself   fettered  by  the.  trend   of   the               authorities to give the words "undue hardship"               a  narrow  meaning.  I think  that  we  should               reverse  that trend and give the  words  their               ordinary meaning, as Parliament intended.   It               would  be  "undue hardship" on the  owners  to               hold them barred by the clause." In  the  same case, Salmon, L.J. said that  the  arbitration clause  put  it out of the power of the court to  grant  any relief  to  a  claimant who bad allowed a few  days  to  run beyond the period specified in the clause even although  the delay  could  have caused no conceivable harm to  the  other side.   He  said that it would be hard and unjust if  a  man with a perfectly good claim for thousands of pounds worth of damage for breach of contract inadvertently allowed a day or two to go by was deprived of the right to be compensated for the  loss  which he -bud suffered, even  though  the  other party  bad  not been in any way affected by  the  delay  and might  perhaps  have been guilty of a deliberate  breach  of contract  and  that  it  was to  remedy  this  hardship  and injustice that the legislature intervened to alter the  Law. He further said  143               "This  enactment  was  a  beneficent   reform,               liberalising  the law in an admittedly  narrow               sector of the commercial field.  I have  heard               it  said that when people have  spent  their               lives   in   chains  and  the   shackles   are               eventually  struck  off, they  cannot  believe               that  their claims are no longer there.   They               still feel bound by the shackles to which they               have  so  long been accustomed.  To  my  mind,               that  factor may explain the court’s  approach               in some of the cases to the problem with which               we are now faced.               He then summed up his conclusion as follows               "In  considering this question the court  must               take  all  the relevant circumstances  of  the               case    into    account;   the    degree    of               blameworthiness of the claimants in failing to               appoint  an  arbitrator within the  time;  the amoun t  at stake, the length of  the.  delay;               whether   the  claimants  have  been   misled,               whether  through  some  circumstances   beyond               their  control it was impossible for  them  to               appoint  an arbitrator in time.  In  the  last               two  circumstances  Which  I  have  mentioned,               which  do not arise here, it is  obvious  that               normally  the  power would be  exercised;  but               those are not the only circumstances and  they               are  not, to my mind, necessary  circumstances                             for  the exercise of the power to exte nd  time.               I do not intend to catalogue the circumstances               to  be  taken  into  account,  but  one   very               important circumstance is whether there is any               possibility  of  the other  side  having  been               prejudiced by the delay.  Of course’ if  there               is  such a possibility, it might be said  that               it  is  no  undue hardship on  the  owners  to               refuse  an extension of time because,  if  the

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             hardship is lifted from their shoulders,  some               hardship  will  fall on the shoulders  of  the               charterers,  and, after all, the delay is  the               owners’ fault." Therefore,  we  will  have to take a  liberal  view  of  the meaning  of  the words "undue hardship." "Undue"  must  mean something  which  is  ’not merited by  the  conduct  of  the claimant, or is very much disproportionate to it. Keeping in view these principles, it has to be seen  whether in  the  facts  and circumstances of this  case,  there  was reasonable  and  sufficient ground for  not  preferring  the claim to arbitration within the time specified in clause  12 of the policy and whether there would be "undue hardship" to the respondent if time not extended. It may be recalled that it was on July 1, 1971 and September 21,  1971  that  the respondent lodged its  claim  with  the appellant to recover the loss suffered.  Thereafter, various letters passed between the parties.  Ultimately, on February 16,  1973, the appellant wrote the letter to the  respondent stating  that the claim papers submitted in connection  with the claim had been scrutinized by the appellant but that  it was unable to accept liability for the loss.  The respondent then   wrote  a  letter  to  the  appellant   on   30-3-1973 complaining about the uncertain language used in the  letter dated  February 16, 1973 and calling upon the respondent  to point  out specifically under which clause of  exclusion  of liability  in  the  policy and the  appellant  disclaim  the liability.   The appellant kept quiet for 2 months and  then on May 144 30,  1973,  seat  a letter stating that  it  had  I  nothing further  to add to what had been stated in its letter  dated February 16, 1973. The respondent was having dealings with the appellant in the business  of insurance from 1958 onwards and in no  instance was  the  claim  made  by the  respondent  rejected  by  the appellant.   The conduct of the respondent in  enquiring  of the  appellant the grounds on which the claim  was  rejected was  quite  reasonable.  It was only after  the  grounds  of rejection were known that the respondent could have  decided whether to resort to arbitration or not.  If the grounds  of rejection  would  come  within the clause  of  exclusion  of liability  under  the policy, it would serve no  purpose  to incur  the  expense and hardship involved  in  resorting  to arbitration.   The  appellant did not give  the  reason  for disclaiming  liability even in its letter  dated  30-5-1973. We do not think that there was any lack of promptness on the part  of  the  respondent in waiting for the  reply  to  its letter  dated  30.3.1973. And, in the first  week  of  June, 1973, the respondent made over the papers to the  solicitors viz.,  M/s.   Banerji  &  Co.  for  the  purpose  of  taking necessary steps for referring the dispute to arbitration  in terms of the arbitration clause in the policy.  On or  about June  15, 1973, the respondent received the written  opinion from  the  Solicitors  wherein they stated  that  since  the letter of the appellant disclaiming liability was vague  and since  the  appellant gave no reason for  rejection  of  the claim  even in their letter dated 30-5-1973,  the  appellant might  rely  upon clause 12 of the policy of  insurance  and contend  that the reference to arbitration would  be  beyond time.  The solicitors, however, advised that in view of  the delay  on  the  part of the appellant  and  its  failure  to specify any reason for the disclaimer, the respondent  might take steps for nominating an arbitrator and proceed with the reference.   When the written opinion was received from  the

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solicitors,  the  respondent  had some  doubt,  because  the solicitors  did  ’,lot  give a  definite  opinion.   So,  it instructed  the solicitors to take the opinion  of  counsel. After  preparing  the necessary case for  the  opinion,  the solicitors  briefed counsel for opinion, on June  28,  1973. The opinion of counsel was to the effect that the respondent should  apply  for extension of time under S. 37(4)  of  the Arbitration  Act and that was received by the solicitors  on 16-7-1973.   The respondent was informed of the  opinion  of counsel and it received a copy thereof on 18-7-1973.   After gathering  the  facts  from the  records  mentioned  in  the opinion  of  the  counsel  the  respondent  instructed   the solicitors to take steps for filing a petition for extension of  time.   It, however took some time to gather  the  facts indicated  in  the  opinion of counsel.   On  25-7-1973  the respondent’s  solicitors sent the brief to counsel to  draft the petition and the petition was received by them on  30-7- 1973.   Thereafter it took sometime to prepare  a  statement from available records. In  the facts and circumstances of this case, we  think  the High  Court exercised its discretion properly  in  extending the time.  The conduct of the respondent was reasonable.  It took  all  steps  it could when it knew  about  the  alleged robbery  inform the police and the appellant The  fact  that the Barasat police reported that the case was false does not necessarily mean that the respondent tried to prac- 145 tise any fraud upon the appellant.  The respondent had filed a  suit against the owner of the truck in question  in  July 1972  for  recovery of the amount of loss.   The  respondent also paid a suit against the owner of the truck in  question in  July  1972  for recovery of the  amount  of  loss.   The respondent  also paid the claims arising out of the loss  of goods  which were transported through the track.  All  these go  to show the bonafides and reasonableness of the  conduct of the respondent.  Both the amount at stake and the reasons for delay are material in considering the question of  undue hardship. We do not think that any material  prejudice would be, caused to the appellant by extending the time.     There would  be  undue hardship if time is not  extended,  as  the consequences   of  non-extension  would  in  any  event   be excessive  and  out  of  proportion  to  the  fault  of  the respondent, if any, in not being prompt.  We do not say that the  mere fact that a claim would be barred would  be  undue hardship.   But  considering  the amount  involved  and  the reasons  for the delay, we think it would be undue  hardship to the respondent if time is not extended. We  dismiss  the  appeal but in  the  circumstances,  it  is necessary that further time should be given to the appellant to  nominate an arbitrator.  We, therefore, extend the  time one  month  from  the date of this judgment  to  enable  the appellant  to nominate its arbitrator.  We also  think  that this is a fit case in which the parties should suffer  their own  costs of the application in the High Court and  of  the appeal here. V.M.K.                              Appeal dismissed. 1-L379SupCI/75 146